The roughly $30 million in federal and insurance funds that the state is said to receive towards $42.8 million in construction costs for five new mental health facilities is just that — rough.
Earlier this month, the Federal Emergency Management Agency (FEMA) provided the state with six project worksheets totaling about $30 million in coverable costs for damage wrought by Tropical Storm Irene. But there’s a hitch.
The state must pay a chunk of that $30 million; that amount is not completely covered by insurance and FEMA.
The state is on the hook for 10 percent of the portion of that $30 million FEMA will cover, also known as the portion that the state’s insurance company, Lexington Insurance, will not cover. The upshot? The more insurance money the state receives, the better off its bottom line will be.
The difference could amount to millions of dollars.
The FEMA match could have been a lot worse for the state. Typically, under FEMA’s public assistance program, which is funding the psychiatric facilities, the federal agency covers 75 percent of its determined share. In this case, thanks to a 2012 order from President Obama, FEMA is covering 90 percent of its share. At the discretion of the president, FEMA can provide a 90 percent match for public assistance if federal aid for a disaster equals or exceeds $127 per person in a given state.
The 90 percent share that FEMA is actually providing the state is less than what the agency would have paid if the Vermont State Hospital had qualified for permanent relocation. FEMA denied the state permanent relocation for the flood-damaged hospital in November 2012.
If the Vermont State Hospital had qualified for relocation, FEMA would have covered 90 percent of the $28.5 million cost of the new state psychiatric hospital in Berlin, after insurance reimbursements were deducted from the total cost of the new project.
To illustrate how the state would have received funding under permanent relocation, Deputy Secretary of Administration Michael Clasen provided a hypothetical example of how the funds could have broken down.
“This is purely hypothetical … but let’s say insurance would have paid $5 million of that $28.5 million. That leaves $23.5 million,” he said. “Of that $23.5 million, FEMA would have paid 90 percent.”
Now, FEMA is only willing to cover its portion of what it would have cost ($17.5 million) to repair and flood-proof the two main buildings that comprised the original Vermont State Hospital: Brooks and the Annex. Rather than FEMA taking into account all of the $28.5 million (minus the state’s 10 percent share of the FEMA portion) for the new hospital, FEMA will only take into account the $17.5 million.
What makes matters a bit more complicated for the state, said Clasen, is that the state currently doesn’t know how much Lexington will reimburse the state, and he doesn’t know when the state will find out.
“FEMA isn’t going to wait for that time,” he said.
FEMA will project what insurance will pay to the state. Then, two to three years from now, when all FEMA and insurance payments are settled, FEMA will take the state through a closing process to reconcile the odds and ends.
This means that in a couple of years the state could have to pay back some remaining sums to FEMA. If this were the case, however, it would mean the state received more than the federally projected amount for insurance, and that would be a net plus.
In all, the state expects to bond up to $75 million to pay for construction at the Waterbury State Office Complex, according to a spreadsheet from the Department of Buildings and General Services.
